Foreign buyer rules relaxed

Prior to getting into Government Labour talked up the effect of foreign buyers on the New Zealand housing market, and copped a lot of criticism for their ‘Chinese sounding names’ claims. They were also accused of exaggerating the impact of foreign buyers – and this has turned out to be true with foreign buyers being just 3% in recent statistics.

Once in power Labour restricted foreign buyers despite warnings of what that would do to discourage new housing developments. They have now partly backtracked.

RNZ:  Government relaxes rules on foreign buyer ban

The government’s overseas buyers’ ban on New Zealand homes has been softened, with some multi-storey apartment buildings now being exempted.

New Zealand officials and minister have also been negotiating with Singapore as the ban contravenes agreements between the two countries – that has now been resolved with Singapore securing an exemption, along with Australia.

Since the legislation has gone through select committees the government has acknowledged some fish hooks, that may have actually put the brakes on housing supply in Auckland.

Broadly, they apply to developers concerned about not being able to complete big projects if they can’t sell individual apartments to foreign buyers.

Another issue was overseas corporates getting caught up in the ban when they wanted to buy residential land – for example to build cell phone towers.

They were valid concerns, Trade Minister David Parker said.

“The advice we had from officials was that if we didn’t allow investment in apartment buildings then the whole complex was more likely not to proceed so there would be fewer purchase choices for New Zealanders,” Mr Parker said.

Parker has admitted they rushed to implementation of the changes and have had to reconsider when it became apparent it was having an adverse effect on trying to get more houses and apartments built.

Under the new regime, overseas investors would be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

The new rules allowed foreign buyers to purchase apartments ‘off the plan’ but they had to sell them once built. They can now retain ownership, but can’t live in them themselves.

This seems weird, especially when the government says they want to get more Kiwis into home ownership.

And the changes announced yesterday are still being criticised.

Phil Twyford in Opposition in 2016: Foreign buyers’ data selective and ineffective

The Government’s newly released foreign buyer data doesn’t give an accurate picture because it was collected at a time when offshore speculators had temporarily deserted the market, Labour’s Housing spokesperson Phil Twyford says.

“The Government is out of touch with the 70 per cent of New Zealanders that support Labour’s policy to ban offshore speculators from buying existing homes. National should back my Bill when it comes before Parliament next month, instead of supporting foreign speculators against the interests of Kiwi first homebuyers,” Phil Twyford says.

Twyford as Housing Minister in December 2017: Ban on overseas speculators a step closer

“This Government welcomes foreign investment in houses to add to our housing supply,” Phil Twyford says.

“However, purchases of homes by offshore speculators push first home-buyers and families out of the housing market.”

Phil Twyford says the legislative changes demonstrate the Government’s determination to make it easier for New Zealanders to buy their first home.

“We expect the law to be passed early next year fulfilling a key pledge in our 100 Day Plan. The previous National government said it couldn’t be done without breaching trade agreements. They just didn’t try and in doing so, they put foreign buyers ahead of New Zealanders.

“This Government prioritises home ownership and housing affordability for all New Zealanders. This Bill will ensure that house prices are set by New Zealand-based buyers, not international buyers,” Phil Twyford says.

The National opposition now say: Twyford’s numbers badly wrong on foreign buyers

“When challenged on the AM Show today and faced with official statistics, Phil Twyford failed to defend his previous stance that foreigners – particularly Chinese – dominated New Zealand’s property market,” Mrs Collins says.

“He originally claimed that 30 per cent of homes in New Zealand were being sold to foreigners. In the face of irrefutable evidence – he could not defend those numbers.

“Official statistics released yesterday show foreign house buyers make up just three per cent of New Zealand’s residential property market, exactly what the previous National Government maintained.

“In the lead up to the election Labour and Phil Twyford ran a scare campaign claiming buyers with ‘Chinese sounding names’ were not real New Zealanders deserving of a home and were responsible for ‘pricing first-home buyers out of the market’.

RNZ: Overseas house buyer problem ‘was never real’

Many developers are still opposed to a ban on the sale of existing homes to foreigners despite a slackening of the proposed new rules.

Only a fraction of New Zealand’s housing stock is foreign-owned and there are developers who think banning or restricting that investment discriminates.

In the first draft of the Overseas Investment Amendment bill, overseas buyers could buy apartments off the plans, but would have to sell them once the building was completed.

The new draft has softened that, now allowing developers to sell up to 60 percent of their apartments off-plan, without the requirement for buyers to sell within a year.

Official figures show nationally 3 percent of people who bought residential property in the last quarter didn’t hold New Zealand citizenship or resident visas.

Mr Church and other developers believe these figures prove the whole law should be scrapped.

“It indicates that the hyperbole around this issue being a much larger problem is just that, it was never real.”

Interestingly Twyford didn’t feature in yesterday’s announcement, it came from David Parker as Associate Finance Minister.

Foreign buyer screening law reported back

The Bill putting in place the Government’s policy of banning overseas buyers of existing houses has been reported back to Parliament by the Finance and Expenditure Select Committee.

Under the new regime, overseas investors will be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

“This will help first home buyers to get their foot on the property ladder,” David Parker said.

All permanent residents and resident visa holders who spend the majority of their time in New Zealand will be able to purchase homes under the regime without obtaining consent.

Australian and Singapore citizens and residents will be treated the same as New Zealand citizens and permanent residents.

Australia was always a special case. Singapore was not happy with the initial changes and also pushed for an exemption.